The Ethereum Foundation has announced plans to allocate 50,000 Ether, valued at approximately $165 million, to support Ethereum’s decentralized finance (DeFi) ecosystem. This decision follows months of criticism accusing the foundation of neglecting DeFi development.
Ethereum co-founder Vitalik Buterin shared on X (formerly Twitter) on Jan. 20 that the foundation will undergo organizational changes to enhance support for app builders and improve community transparency.
The 50,000 Ether allocation will be managed through a three-of-five multisig wallet on Safe. According to a Jan. 20 post by the foundation’s Hsiao-Wei Wang, the wallet has already completed a test transaction on the lending protocol Aave. Wang noted it may take a few days to finalize the setup.
This initiative comes as the foundation’s treasury has shrunk by 56%, falling from 617,000 Ether in January 2020 to 269,000 Ether (worth approximately $894 million), according to Arkham Intelligence. The allocated 50,000 Ether accounts for 18.5% of the foundation’s total holdings.
Critics, including Infinix founder Kain Warwick, have accused the Ethereum Foundation of being disengaged from DeFi while also expressing concerns about Ether sell-offs to fund salaries and events. However, Ethereum core developer Eric Conner recently noted that staking rewards could potentially cover the foundation’s budget, reducing sell pressure and addressing community frustrations.
Some community members have linked the foundation’s perceived lack of engagement to Ether’s underperformance compared to Bitcoin and Solana. They argue that advocates for these networks have been more proactive in engaging with regulators.
Buterin clarified that the foundation is not planning to take an ideological stance or begin lobbying efforts, emphasizing its commitment to being credibly neutral. His approach earned praise from CryptoQuant CEO Ki Young Ju, who highlighted the foundation’s focus on creating value over profit-making amid the rise of memecoin launches driven by celebrities and public figures.
